The Intelligence Report – 30 January 2019
Investors who ignore the potential risks around the policy and technological response to climate change do so at their peril. In this edition, we show how marginal changes in global energy markets potentially impact valuations, then give our outlook for US inflation and fixed income risk assets.
In this video, Mark Lewis, BNPP AM’s new Head of Climate Change Investment Research, discusses how energy transition policies and technological progress each provide stimuli for the other, creating investment opportunities.
The expanding role played by renewables in meeting energy demand growth can provide investors with a powerful signal of the future valuations of incumbent utilities, as testified by the fortunes of German power generators.
Tighter financial conditions, persistent political risk and slowing earnings growth are among the many factors set to inform fixed income choices, with careful security picking likely to matter more to performance than in 2018.
US core CPI and PCE inflation should gently firm in 2019, with the contribution from shelter being supplemented by a growing contribution from cyclically-driven services inflation.
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